Reason how infosys showed 35% YoY profit amid slowdown

Infosys (Nasdaq INFY) is second largest exporter of software and services of India and represents Indian INC's at global level thats nice stats actually recently Infosys posted a 35 percent rise in profits for 3rd quarter when compared to corresponding quarter last year, I always wondered how a company can show such rise in profits in such a weak market which is prevelant all over the world so i thought to go inside the working of the software exporter to see which manegerial decisions are backing such increase in revenues where all the other companies are reeling amid financial slowdown which started as mortagage crises in US and now has engulfed all the major economies into recession and there is prevelant danger of deflation all around the world.

i do have friends in infy too so this is not only my opinion and has inputs from infy related people too so it can't be mistaken. Almost all the indian software services companies are making bucks on projects in which clients (mostly of US) pay per person per hour basis and according to resources indian companies charge anywhere between $15 - $20 per hour per person from it's clients sitting in US . This figure is very minimal for the clients which otherwise have to pay atleast double the amount if they hire in US itself.

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most of the IT companies love to get projects where client pay on per person per hour basis including Infosys, TCS, Wipro and many other's which are serving US on 24*7 basis, other type of proects which are fixed capital projects contribute less then 20% of almost all the indian IT companies, Indian IT companies get minimum US $ 15 (pph) however they give barely $2 per hour to employee ($2 = INR100) roughly so the rest $13 goes into pocket of Indian IT companies so the profit margins for infosys are huge.

I always wondered how a company with 30/100 employees always on bench can get that profits, It may also be noted that the employees on bench are very important for indian IT cos to get new projects because they have to show to potential client about the headcount in order to get new projects, one of my friend told me that there are certain cases in which Indian IT cos show employees that are working in fixed capital projects into the time manpower projects in order to get more bucks from the foreign clients, So it is clear thatIndian IT companies pay salary of over 1 lac employees from ~70000 employees which are billed and rest 30k employees are kept as reserve for showing to potential clients that ther is adequate number of employees of various technologies required by the clients.

Move 1 by managment of Infy : they have made it mandatory for a team to work for atleast 1 saturday or sunday per month. and employee can take any one day off any time in a month but has to come on saturday or sunday on which whole team is working.
Effect - One billing day for client increased and all the employees will never go on leave for the same day of the month so in all one working day increased compulsary in the month so that company can charge the client for that saturday or sunday.

Move 2 - Now what infosys is doing presently is putting more work pressure on already billed employees (which are paid on per hour basis) to work more, recently infosys increased the working hours of employees from 8 hrs a day to 9:30 hrs(exact time changes may differ) now these employees are billed on per hour basis at a whopping amount of minimum $15 per person/hour. So add to it 1:30 hrs more per person per day and multiply it with total number of employees billed in similar manner(25*70000 extra) client has done contract for a fixed period which can,t be changed now, so the revenue per employee has increased however number of employees have not increased neither there is any fall in number of onbench employees (in order to get new projects) This might be a good manegerial decision at this time when there is economic slump and not much openings in much companies so employees of infosys can't do anything rather then working inhuman number of hours in their cubical and Infosys is making much mileage from market employment condition without thinking about the employees , It may be noted that policies of infosys have never been employee favourable and they want to suck even last drop of blood from their employees so that they get $ 15- $30 per hour more /employee from the client. Poor infoscians i guess but they have no other options in present market situation.

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also there are other cost cutting steps going on in infosys like stationary products cut etc, there is only minor difference between infosys and TCs that is only that infosys management love to call media and give one or two statements on daily basis so that brand value is mantained but i think they should care more about the employees working for them rather then giving statements to media on daily basis, I have never seen any of the other IT companies making such hype of their company, i mean TCS is even bigger then infosys in each and every aspect. we'll thats a nice publicity stunts done by infy management without giving a penny in advertisements, however i think they should do more work in reducing the high attrition rate prevelant in their company. so that was the difference between infosys and TCS, TCS (rather whole TATA group does most work rather then speaking in public on daily basis and taking everything out of employees).

And one similarity between Infosys and Fraud affected company Satyam is that in both of the companies promoters are not the owners of the companies , ie they can't do anything on their own, TCS and Wipro are placed very firmly on that aspect as the promorters own majority stake of the company and are real owners of the companies.

So I end this post here as i wanted to clear the reason why and how Infosys have managed to show 35% YoY growth of revenues. hope it's now clear to you about the working of infosys especially in this slowdown.

posted under - Infosys updates, infosys turnover, indian IT companies, Indian economy blog, indian economy updates, economy of india, Indian IT cos, Infy updates, Infosys news

Indian Economy to grow 7% this fiscal says Rangarajan

The economy is expected to grow at a moderate level of around 7 per cent in the current and the next fiscal, but would bounce back in
2010-11, noted economist and Rajya Sabha member C Rangarajan said on Thursday.

"The growth rate for 2008-09 would be about 7 per cent and for the next fiscal also it will be around 7 per cent. In 2010-11, it will pick up, depending on the global scenario," Rangarajan told reporters here.

On recovery of industrial growth to 2.4 per cent in November from a dismal negative growth of 0.3 per cent in the previous month, Rangarajan said it would be around 5 per cent for the current fiscal.

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"There may be some improvement from January onwards but over the year Industrial growth would be low... around 5 per cent," said Rangarajan, who headed the PM's Economic Advisory Council earlier.

Industrial growth stood at 3.9 per cent during April- November, 2008.

Rangarajan said the fiscal stimulus packages given by the government is adequate for the current fiscal and due to the liquidity injection into the system by the RBI, the banking system has enough fund.

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The Prime Minister's Economic Advisory Council Chairman Suresh Tendulkar had also said the current fiscal is likely to end with a minimum GDP growth rate of 7 per cent, down from 7.7 per cent projected earlier by PMEAC.

posted under - economy of india, indian economy trends, indian gdp , Indian economy updates, indian rupee updates
source - www.economictimes.com

Economy of India - Dubbed as unfree economies list

Both India and China have been ranked as "mostly unfree" economies by an annual "Index of Economic Freedom" that also suggests the two countries could speed development in Asia if they press on with economic reform.

The 2009 edition of the "Index of Economic Freedom", published annually by The Wall Street Journal and The Heritage Foundation, a Washington think tank, ranks India at 123 with a score of 54.4 out of possible 100 and China at 132 with 53.2 points. The index ranked 179 countries.

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"Yet, economic freedom has been improving in those countries and that trend should help speed development in the years ahead," the index editors said, noting that 18 Asian economies improved their scores in the 2009 Index while 12 lost ground.

The region's average level of economic freedom is below the world average of 59.5, but the editors predict this could change if two economic giants press on with economic reform.

Hong Kong continues to be the world's freest economy for the 15th straight year. No other economy has yet managed to surpass it. Three other economies in the Asia-Pacific region also made the Index's top 10, Singapore (second), Australia (third) and New Zealand (fifth).

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The index reflects data compiled in 10 key categories and tells a crucial story. Economic freedom is vital because it's "strongly related to good economic performance", write authors Terry Miller and Kim Holmes.

Miller is director of Heritage's Centre for International Trade and Economics, and Holmes is Heritage's vice president for foreign affairs. "Per capita incomes are much higher in jurisdictions that are economically free," they noted. Economies rated freer also perform much better in advancing human development, reducing poverty, and protecting the environment.

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The authors found strong correlations between economic freedom scores and these economic and social variables. The Asia-Pacific region proves that, even as it remains a study in contrasts. "Four of the world's 10 freest economies are in this region," the authors write, "yet most other economies in the region remain 'mostly unfree'."

The region is home to several economies, which the index classifies as "repressed". Turkmenistan, Bangladesh and Myanmar fall into this category, as does North Korea, the world's least free economy.

The 2009 index has expanded its country coverage significantly to 183 economies, although four of these could not be graded because of insufficient data. Levels of economic freedom in 10 categories were rated on a scale of 0 to 100. The higher the score, the lower the level of government interference in the marketplace.

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The 10 freedoms measured are: business freedom, trade freedom, fiscal freedom, government size, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption and labour freedom. Ratings in each category are averaged, then totalled to produce the overall Index score.

Worldwide, the average rating for economic freedom held essentially steady this year. However, as governments attempt to stave off a global recession, their meddling could well threaten economic freedom and long-term economic prosperity.

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"There is a real possibility that the scores in this edition might represent the historical high point for economic freedom in the world," the authors warn. Of the 179 economies ranked (the most ever), only seven are classified as "free" (a score of 80 or higher).

Another 23 are classified as "mostly free" (70-79.9). Most of the economies ranked - 120 - are either classified as "moderately free" (60-60.9) or "mostly unfree" (50-50.9). Twenty-nine economies are classified as "repressed", with total freedom scores below 50 per cent.

posted under - Economy of India, Indian Economy blog, Indian Economy updates, Asian Economies updates, india economy updates
source - www.economictimes.com

Manmohan Singh lures NRI's giving sops for investing in India

At the start of 7th Pravasi Bhartiya Divas (PBD) in Chennai on Thursday, Prime Minister Manmohan Singh announced a slew of policy measures for the benefit of overseas Indians. These included allowing overseas Indian citizenship (OCI) card holders to practise in India, launching a global Indian knowledge network as a virtual think tank, issuing smart card to all overseas Indian workers.

The prime minister said the overseas Indian citizenship scheme announced in 2006, got an overwhelming response. He also announced that OCI card holders — who are qualified professionals such as doctors, dentists, pharmacies, engineers, architects and chartered accountants — can practise unhindered in India. Further details to operationalise the benefits are being worked out.

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Dr Singh also launched a new initiative called “The global Indian knowledge network”. It will connect people of Indian origin from a variety of disciplines to users at the national, state and local levels in India. “My hope is that the network will facilitate transfer of knowledge and serve as a virtual think tank to generate new ideas on issues such as development, education and healthcare,” he said.

He also referred to the contributions of about five million Indian workers in the Gulf countries. “I have seen their contributions when I recently visited Oman and Qatar. I was amazed to see their grit, their determination and how they are contributing magnificently to processes of wealth creation in these countries,” he said.

He said: “We are there concerned at the rise of tensions in the region as a result of the attack in Gaza that has led to the needless loss of lives of many innocent men, women and children. India has strongly condemned these incidents and it is our hope that the international community would get together and help to restore peace in the region as soon as possible. I wish to reiterate our unstinted and unwavering support for the just Palestinian cause.”

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“We have put in place several measures for better protection and welfare of our workers overseas, including entering into inter-government agreements,” he added.

He also said India had launched a comprehensive e-governance project on migration. Under this project, every worker will be issued a ‘a smart card’ that will contain all details of the worker like his work contract, his employer, his insurance and the like.

The data will also be available to the government as well as its missions overseas. The objective is to transform emigration process into a simple, transparent, orderly and humane one.

posted under - Indian economic updates, 7th Pravasi Bhartiya Divas ,Pravasi Bhartiya Divas , PM updates, economy of india updates, indian rupee updates
source - economictimes.com